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Greece, Serbia Defy New World Order

It became clear when the dust settled after the recent elections in Greece and in Serbia that two epicenters of resistance to aggressive globalism continue to exist in Europe.

The US and the EU with all their might neither succeeded in coercing the new cohort of Greek politicians into a deal that would establish a government ready to bow to the EU and the IMF nor managed to help Boris Tadic, long believed to be the front-runner, regain presidency in Serbia. In fact, the impression is that we have just witnessed a domino effect, with the determination demonstrated by the Greeks, especially by the leaders of the rising new nationalist and patriotic movements, causing Serbs to look for alternatives to the scenarios prescribed to their country by the West. Originally, Tadic polled a share of the vote 16% bigger than what forecasters gave to his nationalist rival T. Nikolic, but the advantage melted down hours ahead of the runoff, and the latter convincingly defeated the former.

At the moment, there are serious reasons to take a closer look at the social and political dynamics which unravels in Greece regardless of the preferences expressed by the Brussels bureaucracy and the financial elites.

The May 6 snap elections in Greece highlighted an unprecedented decline of public support for the traditional heavyweights of the Greek political scene – the right New Democracy and the Panhellenic Socialist Movement (PASOK) which only won 18.85% and 13.18% of the vote. In other words, this year the two combined got less than a third of the total, in contrast to the 2009 elections in which the figure was 77%. The second-largest share of the vote – 16.76% – was claimed by the Coalition of the Radical Left (SYRIZA).

For a few days following the ballots count, there seemed to be absolute confidence in European capitals that the Greek parties would eventually negotiate a coalition and the arrangement imposed on Greece in late 2011 by the EU and the IMF – financial infusions for consent to a crippling austerity package – would not be called into question. European parliament speaker Martin Schulz bluntly dictated that “the negotiations to form a government in Athens should have as a target the honoring of the country’s obligations towards the European Union” [1].

German diplomacy chief Guido Westerwelle made an even stronger statement: “we expect the formation of prudence government in Greece, with a clear European orientation”. When it became clear that the first round of attempts to put together a government coalition in Greece failed, he added that the agreements between the EU and Greece must remain untouched and that this would not be a subject for further discussions [2].

Contrary to the above expectations, the Greek politicians showed little “prudence”. The efforts made by Greek president Karolos Papoulias to talk the leaders of the parties which made it to the parliament into subscribing to anything that would make Brussels happy led nowhere and the two last-minute meetings in the presidential palace which The Wall Street Journal described as the last attempts to form a cabinet [3] produced no result.

SYRIZA cleverly rejected the very possibility of compromise with the sinking New Democracy and PASOK. A survey released by Public Issue/Skai TV on May 24 left SYRIZA hopeful of garnering 30% in the June 17 rerun [4], and its leader Alexis Tsipras declared in advance that his party would dodge the urgent talks president Papoulias scheduled for the night of May 14, explaining that that SYRIZA’s objections to the austerity policy pressed for by the EU and the IMF were too fundamental to be diluted. It should be taken into account in the context that in Greece part of the prize for the top score is half a hundred seats out of 300 in the parliament. Consequently, SYRIZA has a realistic chance to not only emerge as the main force in the would-be legislature, but to completely dominate it.

President Papoulias also invited the Democratic Left, a party which collected 6.11% on May 6, to the talks over the potential coalition. The group’s leader Fotis Kouvelis, though, reacted by issuing the absolutely reasonable verdict that no consensus government would possibly materialize in Greece under the current circumstances [5].

Over the past several months, neither the New Democracy nor PASOK had any luck offering the constituency a long-term program of climbing out of crisis, unless capitulation vis-a-vis the EU and the IMF counts as such. This, of course, is not what the Greeks who feel that their country is covering the costs of the poor performance by the EU and the international financial institutions would ever buy. In the meantime, the pledges dispensed by New Democracy head Antonis Samaras to slash taxes contrary to what his party promised to the EU and the IMF increasingly make the economic part of the electoral debates sound like a farce.

The Western political class and financial players must be on the brink of panic considering that radical nationalists – both left and right (such as the Golden Dawn party which posted a 6.97% result on May 6) – appear to be en route to full-scale triumph in the new round of Greek elections.

London-based The Sunday Times hurriedly issued projections about Greece’s dropping out of the Euro zone within a couple of months and hinted at guesswork going on in British banks concerning the subsequent developments [6]. Indeed, stakes in the game are high: according to Germany’s Berenberg Bank estimates, the EU institutions stand to lose at least Euro 113b, and the IMF – Euro 22b if Greece defaults on its debts. The European Central Bank, moreover, will have to say good bye to Euro 27b should the Greek bonds end up in the garbage bin. Combined, the above would translate into a whole financial “heart attack”, and if Portugal, Spain, and Italy similarly fall, which the economic logic pretty much implies, the threat of default would hang over the entire EU.

Der Spiegel joined the chorus of the authors of grim forecasts for Greece in a paper spelling out the reasons why the country should opt out of Euro. The point of the opinion piece is that Greece neither was nor is ready to embrace the currency union, and withdrawing from it would actually open up to the Greeks an opportunity to get back on feet [7].

It attested to the level of anxieties across the global financial markets that shortly thereafter Fitch downgraded Greece from B- to CCC. On May 18, the Asian stock markets saw the worst drain since September, 2011, and the trends visible in the US are nearly as negative. US investors are likely concerned not only by the developments in Greece but just as much by various indications that they trigger a wider domino effect in Europe.

Moody’s, for example, downgraded 16 Spanish banks recently and 26 Italian banks earlier. The Bank of America analysts suppose that two thirds of European banks would be reporting losses within a year from the hypothetical departure of Greece from the Euro zone. An expert from South Korea’s Tong Yang Securities threw in a key detail of the picture when he stressed that as of today a big part of the problem is the difficulty of assessing the risks or the related damages [8].

South Korean bonds are hit worst by Europe’s escalating financial mess, while the European financial top brass pretends to be unperturbed, maintaining that Greece is not yet out and the EU will cope with the consequences if the worst happens.

European Central Bank president Mario Draghi made it clear that he wants Greece to be a Euro country, but not at any cost. His predecessor Jean-Claude Trichet even urged the EU institutions to tighten the austerity measures – speaking at the Washington-based Peterson Institute of International Economics on the eve of the G8 summit, he suggested authorizing Brussels to condemn EU countries as bankrupt when necessary and to subject their tax policies to external control, meaning that mastery over the economies of countries with frightening budget deficits – Greece, Portugal, Ireland, Spain, and Italy – can thus be achieved [9]. However, chances to put such designs into practice are slim since problems are swelling fast and the response is chronically slow. Charles Stanley and Co strategist Jeremy Batstone-Carr therefore warns that the probability of the Euro zone’s falling apart is overwhelming.

For the EU establishment and financial sector, the upcoming elections in Greece are something like the last straw. There is still hope that catastrophic predictions can scare the Greek constituency into backing the parties which beg to continue cooperating with the EU and the IMF in the financial sphere. “We look forward to contact the (future) government once it has been formed,” said IMF spokesman David Hawley.

Theoretically, the window of opportunity is not completely shut, but fresh opinion polls leave little room for optimism. Two scenarios of what will happen if SYRIZA wins the race are currently on paper. Citigroup projects that either the EU makes a new attempt to draw the Greek administration into cooperation with the creditors by dangling extra credits and payment-delay agreements in front of it, or, which is likelier, Brussels will accept it as an accomplished fact that Greece must go. Citigroup Euro area economist Juergen Michels is open that, to his mind, the elections in Greece can cause “self-destructive” behavior, and, generally, Citigroup sets the probability of Greece’s walkout at 75% within two months.

The truth is that the Greeks do not appear to be too scared. Unlike the global banking corporation, they stand to lose little, with the notable exceptions of national dignity and a shadow of independence from Brussels and the IMF. Similarly, the Serbian patriotically oriented majority felt they had nothing to lose when they entered the polling booths on May 20 to confirm the choice which – no less than the drama unfolding in Greece – left Europe in a state of shock.

The triumph of T. Nikolic in the runoff in Serbia left in a state of shock those who were convinced that the electoral intrigue in the country had evaporated during the first round. The defeat of B. Tadic, who originally polled 16% ahead of his rival according to the vast majority of public opinion surveys but eventually lost by a 2% margin, deserves a place in history as a vivid illustration of the risky character of electoral estimates as such. Germany’s DPA outlet, for example, cited CECID analyst Dorde Vukovic, who has a lengthy record of monitoring elections in Serbia, as saying that Tadic would garner 58% of the vote and Nikolic – only 42. Slobodan Antonic, another Serbia watcher, had to admit when the dust settled down that the outcome of the elections was best described as an “earthquake”.

In the wake of the ballot count, several Serbian commentators floated the hypothesis that the turn of the electoral tide in Serbia – along with the outpouring of dubious projections, etc. – could be elements of a wider geopolitical scenario, with the West’s consent to an alternative to Tadic being given to avoid a probe into the abuses by which the first round was evidently marred. Indeed, the inescapable conclusion stemming from the comparison between the number of eligible voters on the eve of the first round of the elections in Serbia (7,026,579) and its total population as of 2011 (7,120,666) seems to be that the country is almost exclusively inhabited by adults. Moreover, since the previous presidential race the number of voters in Serbia somehow grew by 40,000 a year against the background of the annual population contraction which is estimated at 30,000.

Arguments in favor of the above theory were seriously reinforced by the unusual gesture attributed to European Council president Herman Van Rompuy and European Commission president José Manuel Barroso who posted congratulations to Nikolic on the web three hours before polling stations closed in Serbia, thus allowing the world to get a glimpse of the political fever that must have been raging at the time in Brussels. The bizarre statement disappeared from the European Commission site shortly to resurface at a reasonable time, in the morning of May 21. When the number of eligible voters dropped to 6,771,479 as the runoff drew closer, suspicion sneaked in that a belated attempt to avert a scandal by making the official figures look real had been made.

In any case, at present the world – and Russia in particular – are getting acquainted with the new Serbian president. Considering that over the past several years Mr. Nikolic has built a reputation for chronic lack of coherence in his statements on key issues like the relations between Belgrade and Moscow or Serbia’s Eurointegration bid, it may be a good idea at the moment to stop savoring the campaign slogans of the former activist of the loudly anti-Western Serbian Radical Party and to subject to scrutiny his actual first steps in office.

Topping the list of those was Nikolic’s May 26 visit to Moscow where he attended the congress of the pro-presidential United Russia bloc with which Serbia’s progressives had signed a number of agreements on inter-party cooperation. No doubt, the tour marked the opening of a new phase in it, especially as Nikolic met with Russian president V. Putin.

Shortly before Nikolic’s arrival to Moscow, United Russia envoy to interparliamentary union A. Babakov stressed in an interview that he long knew the Serbian leader as an unwaivering proponent of a stronger partnership with Russia and expected him to uphold the same principles upon inauguration. Babakov added that Russia and Serbia can jointly unlock exceptional opportunities, especially in connection with the South Stream gas pipeline project which will see the start of construction in late 2012. Nikolic, it must be noted, told Russia’s ITAR-TASS media agency a while before the run in Serbia that the relations between Belgrade and Moscow would get a boost if he takes charge.

Speaking of Nikolic’ visit to Moscow, it did not flow below the radars of Balkan policy watchers that – in contrast to Putin’s crisp formulations – his assessments of the relations between Serbia and Russia were loaded with restraint. Putin mentioned that Russia had provided an initial $200m credit to Serbia in 2010 and was ready to make available the $800m follow-up, but said the money should go to infrastructural projects and urged Nikolic to send Serbia’s administrative machine a clear message that Russia was waiting for down-to-earth feasibility studies. Nikolic’s response sounded diluted – he pledged to do whatever it takes to make sure that Serbia offers Russia quality projects to put the money to work, but made no references to South Stream or other projects which had been given stamps of approval on the intergovernmental level.

It must be noted that Nikolic touched upon the issue of Kosovo, a problem central to the current state of the Serbian statehood, with even greater caution. He thanked Putin for Moscow’s support for Belgrade on Kosovo and Metohija, but immediately indicated that he did not believe the negotiations between Serbia and the EU were interwoven with the Kosovo theme. Nikolic explained he would be building Serbia in line with the EU norms but said he had never heard of having to recognize the independence of Kosovo and Metohija as some sort of a prerequisite. It is common knowledge that Germany and other EU heavyweights would never subscribe to the view, but Nikolic promised the Russian media that full clarity would be achieved during his June 13 visit to Brussels.

Nikolic, on the one hand, asserted that, as the the Serbian constitution dictates, any take at the independence of Kosovo and Metohija is out of question without a prior referendum, but, on the other, said it was equally true that Belgrade was no longer able to rule in Pristina and Pristina – inKosovska Mitrovica.The phrase readas a thinly disguised “yes” to the partition of Kosovo, a province over which Serbia has absolute right to exercise sovereignty, and appeared to be a definitive departure from the position Nikolic used to campaign on.

Though, contrary to previously announced plans, Nikolic chose to pay his fist presidential visit not to Berlin but to Moscow, as of today his pledges that cultivating the strategic partnership with Russia would top the Serbian agenda do not seem to be materializing. Rather, Nikolic is trying to sense a point of balance between the roles to be given to Russia and the EU, with Eurointegration still an unchallenged priority. Nikolic’s quotations of the popular will concerning the territorial integrity of Serbia mix with professed allegiance to EU norms, but it is an open secret that in Brussels the norm for Serbia is regionalization, a policy which, in the long run, promises exit tickets to Presevo Valley,Vojvodina, and Sanjak rather than just to Kosovo and Metohija.

Thinking of the new Serbian president’s Moscow tour, one starts to feel that, paradoxically, Putin may be in many regards more Serbian than Nikolic, the latter still having to prove that his opposition to the humiliating Western scenarios for Serbia is not a myth. If he fails to do so and, to the delight of Washington and Brussels, Belgrade’s policies under the presidency of Nikolic slide to become a continuation of those pursued under Tadic, a bitter disappointment awaits the Serbian constituency which, on May 20, issued to the new leader an absolutely clear list of “dos” and “don’ts”.